CFA Practice Question

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CFA Practice Question

Perfectly competitive firms ______

A. maximize market share.
B. maximize total sales.
C. minimize total costs.
D. maximize profits.
Correct Answer: D

Profit maximization is the only objective of a perfectly competitive firm.

User Contributed Comments 6

User Comment
DannyZhou So do all other types of firms?
EMerkert Monopolistic firms would first seek to maximize market share by undercutting competitors, once this is acheived then they can maximize profits by raising prices without much competition
udhay Why not B,In perfect competition firms can make max profit only thru max sales
Thescholar Maximising sales may lead to increased costs which may therefore not maximise profit
vatsal92 Profit is the sole motive of perfect competition firms.
fzhou MR = MC = ATC_min is profit maximizing rule.
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